The statement ‘hardware is hard’ is a universal tone prone to the tongues of many entrepreneurs and investors. Hardware is the first SI unit of innovation for anyone considering to venture into the business of electronics, robotics, and IoT. It is home to the numerous software that comes to life from the Cloud regularly. Many hardware-related companies have, however, managed not to live to the expectations of this set universal tone. Rozum Robotics is an example of such companies that are continuously striving to break the hardware barriers through the creation of durable and reliable robotic hardware. It requires the toughness of steel to run and survive a hardware business or company.

This article takes a look at the hardware world and how it feels to be in it. Additionally, it also considers some benefits tied to this hard-earned package in the course of its exploration.

Marc Andreessen takes the first credit for acknowledging the toughness of dealing with hardware through the above mentioned quote. He moreover agrees and indicates several reasons why software companies seem to be ahead of the hardware companies.

Let us start by agreeing with the sentiments of Marc Andreessen in regards to hardware entrepreneurship. The onset of hardware companies is not a walk in the park. Moreover, the level of difficulty rises even further to insane margins when it comes to scaling such companies. It is easy for an expert software developer to work from the comfort of a couch and spin up to glory some random application until it comes to life. It is not the same case with electrical and mechanical engineers. Not only do they spend more time but also a thousand dollar bills just to come up with early prototypes. As if it's not bad enough, if the created product already exists in the market space, the capital intensity will worsen. For a Software company, finding bugs after an application’s launch will be easy to fix through push updates. The existence of a flaw under a hardware company profile will trigger field retrofits and recalls. Such processes are potentially bankrupting, logically complicated, and stressful.

The mentioned harsh realities, however, do not hinder the hardware entrepreneurs from ripping some juicy benefits. The software counterparts moreover do not have the credentials to allow them to join such feasts.

1. A Tangible Product Produces a Tangible Impact

The opportunities in the hardware startups world produce changes that are real and visible. They constitute the mission-driven and environmental entrepreneurs. The profile of such-like companies engage in and tackle animal welfare, nutrition, space travel, and renewable energy through physical products. Thus this grind journey for a hardware entrepreneur might be tough, but the reward is a priceless creation of an improved tangible world.

2. Maintained Simplicity in the Hardware Product Lines

The early stages of SaaS Companies found their enterprise sales success through individualizing the customization of the client-targeted products. When a VIP client needs a modification on a specific-versioned software product, it is often up to the entrepreneurs to put their thoughts together and present an agreeable deal. However, this road can lead to many hurdles when the requested clients’ custom features cannot stand on their own without yearly support. Moreover, too much coating through customization can drive the clients into an assumption that they hit the bullseye on a market fit product. Thus the reality here is that each software customer desires to acquire a somewhat unique product that has no public popularity.

Hardware businesses, on the other hand, produces a physical product without even the consideration of a one-off customization package. It is merely because attempted feasibility on these products is too expensive to consider. Fortunately enough, the hardware clients understand this dilemma and thus making the business model scalable and simplified. It is also a gauge of certainty in the acquisition of a market fit product as multiple clients will be purchasing an identical product.

3. Hardware Startups can Forecast their Competitors next Move

Through the study of the ‘Generation Iron’ documentary on Netflix, some ideas come to mind. It is never the interest of new athletes to abruptly dethrone the champions of the strongman competitions. It is a slow-paced journey with years of training that leads to the build-up of sufficient muscle mass. Thus it is a slow-paced stride walk up the ranks with the reigning champions having enough time to prepare for their potential dethroning.

This competitive landscape brews some similarities in the hardware businesses. It is because the applicable cost of fixing errors in a hardware product is much higher than that of the software counterpart. Thus, when dealing with software, it is inexpensive and easy to fix errors during post-launch. The product development cycles under hardware take longer to attain completion, and the attached field testing is continuous. Even the giant companies consider beta-testing their hardware products on a window period of a year or before ramping up. Thus the hardware first-movers have more reaction time on their hands. The existence of this grace period turns out to be, arguably, the best advantage there is for the hardware explorers. It is unlike software where a garage grouping of a few great developers is enough to dethrone anyone overnight from the software market.

4. First-Mover Protection in the Hardware Businesses Through High Switching Costs

The risk and danger of venturing in the mines of software competitors are that it is incredibly low-cost to attain an alternate solution. A regular user to a delivery app can switch to a trial version of another similar app and permanently decide to go with the latter in a heartbeat.

The hurdle in hardware is not as easy as convincing a customer to switch between websites. It is persuading a customer to physically make an installation of a new hardware product and do away with the previous one. The costs catering to this switching of products is higher. For the client to accept the underlying physical disruptions and switching costs, it will take convincing the customer why your product is way better or cost-effective.

5. Downside Protection for the Hardware Companies

The worst-case scenario of a hardware company is losing a product bid to a competitor. However, despite such occurrences, the shareholders will not go home empty-handed as there will be something left to salvage. If the built physical assets are still capable of delivering value, then there is some worth left in them. This case is not the same for the software companies as it is the winner-takes-most or winner-takes-all scenario. The competition is so brutal that a company’s worth could reduce to $0.

This article tried to soften the blow that ‘hardware is hard,’ but unfortunately, we will have to accept this sore truth. However, it is the uniqueness of such advantages that matter if you make it past the finish line. So don’t unbuckle your seat belt yet during this hardware entrepreneurship journey.

Share this Story